Is Your Small Business Heading Towards Failure?

Listening to NPR the other day I heard some crazy statistics about the rate that new businesses, especially restaurants, are closing. I was driving at the time so I was unable to write down the specifics, but it got me thinking about how true it is. I’m from a small town and we have one of the cutest downtowns in the U.S. The tourism is great for the small businesses and some have been there since the day I was born, but it seems like almost every other building has a new business in it every other month. As a consumer, there are some sure-fire signs leading up to the closure of a business that can be seen (and prevented).

Passion First

The main characteristic of a failing business is a loss in passion. Especially in small businesses, when they first move onto the block, the owners become very active in the community, hosting events, and sparking conversation with every customer. There is an honest hope in every small business to be accepted by the community that it just joined. The businesses that don’t make this initial move tend to fail sooner. Eventually, the owners and managers become part of an active community or they fizzle out. They stop hosting events and stop attending. They don’t listen to suggestions by fellow business owners and their customers.

The best way to avoid this slow decline is to become part of a permanently existing group and to never give up on hosting events (sales, releases, milestone celebrations, new products). If it is necessary to stop a product or event because the costs exceed to benefits that’s a different story, but if your customer base really enjoys a certain product and you stop producing it simply because it continues to sell out and it’s hard to make, that’s a poor system.

If something is selling out you are either not producing enough from the start or there is high demand. That means you can afford a higher price on the product. A price hike will push customers away, so if the only way to continue production is to increase the price, don’t get too sure that customers return no matter how expensive you make it. Mainly, if you stop caring to attend community events or halt production, your customers will notice. If you don’t think you will care about your business a year or even only a month into it, it may be in your best interest to find a new passion.

Friendly Face

A few businesses I visit regularly when I am in my hometown have made some mistakes but they do one thing right that has helped them remain alive. They care about their customers. They may not make financial compensation, but I know every time I go in there will be a smiling face awaiting me. Now, between the shop that gives me a smile and sold me the wrong item once or the shop whose employees stared at a magazine while selling me the wrong item, I choose the former.

This leads us to the hiring business. As a small shop, it is important to know your employees. Make sure you are hiring people who know what to do in unique situations. If they are going to be working a lot of hours they become the face of your company for that amount of time. Don’t lose customers because of the people you are paying. It is also important to make sure that your employees know that they are joining a constant project and community position. Some people know that in larger places they can get away with never looking off their phone, but it is important to make them aware of what you want the store’s environment to be. Sometimes all it takes is some extra communication.

GoodLuck

There are times when it comes to opening and running a small business that you just have to hope for the best, especially if you are offering a service or product that has either never been offered in the area or is already being offered. If you notice a decline in your business there are two things to consider. First, look at your finances. Is your spending in the correct places? Are your products prices too much or too little? Second, ask your customers their opinion. This does not mean linking to a poll in an email or laying out comment cards. This means every time someone walks in your store make conversation and ask them actively and sincerely what they like or don’t like about the store. Maybe ask what type of events they like to attend and think about how you can work that into what you do.

Good luck on your small business. Remember that by starting one in the first place, you are joining a community. It’s important to have a passion for your products, want to serve your customers, be friendly, and have personality. The best people to turn to are successful small business owners and your customers. If someone walks in a lot but always leaves without buying anything, maybe ask them what you could do to change that.